Posts Tagged ‘foreclosures’

I read an article the other day that claimed Austin is now becoming a Seller’s market. This means when inventory levels for homes fall below 5.5 months (number of listings divided by the number of sales) sellers are in a good position to sell. In a Buyer’s market which many of us know we’ve been living in over the last 3-4 years simply means that their are more houses on the market compared to the relative number of buyers. This means that buyers have negotiating power and have plenty of homes to choose from. The influx of foreclosures and excess inventory of new homes have contributed to this in a big way. It’s been estimated that 1 in 3 buyers are looking at foreclosures to try to get a good deal. Unfortunately many buyers have learned over the last year particularly that foreclosures are not always as good of a deal as they sound. Repairs are rarely done to make the house livable, and even if the house appears to be in decent shape, many buyers are finding problems and costly defects that where not discovered in the initial inspection process. “Caveat Emptor” is a phrase I believe best describes these types of purchases.

The second part to this equation is new construction. I remember the days just a few years ago when builders had the capital to go out and build spec (pre-built) homes in new communities by the dozens. It was a great way for builders to sell back in the day, because if you could fog a mirror you could pretty much qualify for a home. So the shelf life for spec homes was relatively short. Then you add the vast amount of capital that builders could raise to take down large tracks of land and off they went.

As we all should know the economic crisis has changed the world we live in. Foreclosures, although still on the rise, are not saturating the market. Fannie Mae, among other investors are now piloting a program called the Deed for Lease. If you own a home and cannot be approved for a loan modification, Fannie will allow you to give back the deed to your house and in exchange allow you to lease back from them for 1 year. So why do we care? Well, think about it, if the owner of the property leases the property back than that’s 1 less REO property on the market. This may seem like a good thing for distressed homeowners at first. However, Fannie Mae is not going to be in the property management business instead they will contract out the property management to third party management companies. Furthermore since the management companies will not technically own title to the property, expect these management companies to put these properties back on the market and inventory levels to creep back up in the next 12 to 18 months.

As for new home construction, if you want a new home expect to wait. Builders are no longer building spec homes. You’ll see 1 or 2 model homes but that’s it. New homes will be sold on dirt. Meaning you need to contract first before they start construction. Plus, don’t be surprised if you will be asked to get the construction financing in your name as well. And land acquisition by builders, depending on who you talk to is down as much as 50-60%.

So what does this all mean? Well if you are a current homeowner and want to sell your property, now is the time! That’s what a Seller’s market means. However, don’t expect to get a high return on your investment though. Remember the house still has to be appraised, and with the new appraisal standards and valuation code of conduct, appraisers are literally killing deals left and right. I myself sold a listing for full price only to have an appraisal some back $5,000 less a week before closing. It was not fun. There are some ways you can protect yourself when it comes to valuation issues. One of them is larger cash down payment requirements. I have a formula based off the type of contract that I use for my clients that helps them understand what to expect and how to evaluate offers beyond Price.

In today’s market you have to read between the lines. for more information find me contact me at 512-656-4243.

Dallas county reports more than 5000 foreclosure filings for June 2009 auction. Since the foreclosure sales are all done at the courthouse steps with that many properties how can they possibly auction off that many homes in 1 day?

How To Buy Foreclosures

How to buy a foreclosed? Where can I acquire homes in default to buy? Are there any acceptable foreclosed houses deals? Does today’s industry mean there are many secure deals? How can I purchase a real estate property cheap in down industry? Can I bargain a real estate property for a half price or a fraction of its price?

If I are looking to buy foreclosed properties as your primary residency or to invest in foreclosure properties, you will need to check a company that specializes in homes in, homes that are in default, whose homeowners have encountered a notice of default AKA NOD. Notice of default is a notice whereas the owner of the house couldn’t make one or more, usually more than one mortgage payment and is currently in default, meaning the bank is foreclosing on the house and is selling the home at the trustee’s sale. A trustee’s sale is a sale when a real estate property in foreclosed houses is sold at an auction.

The best way to check a homes in foreclosure to purchase is to go to an action. Before the foreclosed properties, or notice of default action the real estate that are being foreclosed on will be listed for those interested in buying and investing in foreclosed homes. Oftentimes a real estate that’s being foreclosed on has other debts recorded against the property, so it is advisable to check with a title company and run a preliminary title search to discover out all other liens recorded against the property. One of the most common liens found recorded against a property in foreclosed real estate is mechanics lien.

A mechanics lien is an unpaid debt ordered and shown against the owner of the home who failed to pay for home repairs. Common cases of a mechanics lien is unpaid contractor’s bills. Home improvement, roof repair, pool repair, and any other work that was done on the house and that the owner of the home has not paid for to the contractor can be a cause for a mechanics lien. Mechanics lien is usually not a huge deal. It must be foreclosed on within three months to get a judgment and to convert the mechanics lien into a judgment lien. If not foreclosed on the mechanics lien within three months (in California, other states may vary), a mechanics lien expires.

Other lies recorded against a homeowner in default may include a child support general lien, that’s usually recorded in each county the child support obligor resides and has any property in; and tax lien. When shopping around to purchase foreclosed houses, those are the things to look out for. If not taken with caution you may end up with a foreclose that seemed like a stable deal only to get out that you inherited other debts I were not aware of.

In addition to the foreclosing lender, there may also be a second mortgage, which in many cases is a junior lien and a home equity loan, which is also a lien against the property. Another thing to remember when buying a foreclosed houses is that in some cases the owner of the house will make payments to the senior lien holder but will default on the second (junior) lien. In this case often the second (junior) lien holder will foreclose on the owner of the home.

However, if you purchase a real estate property with cash amount that satisfies the foreclosing lender (the junior lien holder), you will still owe the full amount to the senior lien holder. The thing that can really screw I is that once the title is transferred, the senior lien holder is not obligated to continue taking mortgage payments from the new homeowner and it is up to his discretion whether he will agree to put I on the deed or immediately foreclose on I. This happens a lot is that a new owner unaware of the first lien holder will take possession only to find out a few days later that the senior lien holder has initiated foreclosure proceeding against the new owner.

When looking for a foreclosed properties to buy, be very careful. All homes in delault are sold as is and it is up to I do run a title report. If I pay a title company for a complete title report, the title company guarantees that the disclosed information is everything that is recorded on the title. If I later obtain out undisclosed facts, the title company that sold I the title report is liable to I for the full amount of damages. A title report may not be the cheapest but it is well worth the money and the potential headache. For more information of finding a foreclosure to buy visit Mortgage Refinance Loans

For those of you who have been thinking the housing market is bottoming out, don’t believe everything you read. FNMA has put a moratorium on evictions since October 2008, and every lender under the sun has pretty much followed suit. Come June, auctions and particularly evictions will again raise their head. The loan modification programs have had little effect and many homeowner who were able to modify their loans have begun to get behind in their payments in as fast as 90 days. Thankfully, it’s not the end of the world. Real estate will recover, prices will bottom out, and buyer’s purchase power will increase again once credit policies loosen.

If you’re in Texas be glad. According the the Texas A&M Real Estate Center, the number of real estate transactions have experienced double digit drops. However, house values over all have remained relatively flat. In fact, in some micro-markets real estate valuations have actually continued to climb.

For now, if getting good deal by buying a foreclosure is what you’re after, “caveat emptor”.

1. Trust only agents that know how to work with foreclosed properties. Especially first time home-buyers. I’ve heard the stories and have seen the tears. Give yourself plenty of time to close; 60 days is a good idea.

2. Make sure to ask for everything upfront. Once you’ve contracted on a deal try to stick with it. If the house is really what you want then don’t loose site of what’s really important. The amount of channels, hoops and red tape that sales managers for institutional banks and asset management companies have to go through when additional consideration is requested based off a repair could jeopardize the entire deal. Some sellers are now offering their own home warranty solution in order to cover mechanical devises that break down once you move in.

3. If the house has been vacant for a while, their’s usually a reason for it. Sellers of distressed assets will typically fix the big things, like foundation. However, be careful of houses with pools. Usually they’re only boarded up. The reason, pool companies will charge 10’s of thousands of dollars to fix a pool. So the banks typically don’t even mess with fixing them.

4. Try an auction. Yes, auctions are coming back. If you remember in the late 80’s and early 90’s when you could buy a house at an auction at a great deal you may want to consider going to a few. Keep in mind, the best deals are going to be those properties that have been sitting vacant for quite some time relative to other homes in the neighborhood.

Foreclosures can be a good deal but make sure you know what you’re getting in to. You can check out foreclosure listings on my website, http://www.CharlesGalati.com.